Variable overhead spending variance
In one sentenceThe difference between actual variable manufacturing overhead and the amount that should have been spent for the actual hours at the standard rate.
Simply put
Variable overhead, such as machine electricity and operating supplies, is usually charged on labor hours or machine hours. This variance asks: did you spend more on it per hour than you planned?
It resembles the price variance for materials and wages, but it groups many small items, so if it turns out large, open the item details to find which one is the cause.
Worked example
A confectionery factory charges variable overhead at 20 SAR per labor hour. It used 520 hours, and these costs actually came to 11,000 SAR.
Allowed for actual hours520 × 20 = 10,400 SAR
Actual − Allowed11,000 − 10,400 = 600 SAR
Spending variance (unfavorable)600 SAR
Formula: Actual variable overhead − (Actual hours × Standard rate)
Don't confuse it with
Variable overhead efficiency varianceIt measures the effect of extra or fewer hours, not spending per hour.